Tuesday, November 8, 2011

What world do these State of Massachusetts employees live in ? Pension fund still offering bonuses

A friend who does mental health counseling has a line he uses when he runs into someone who is saying or doing something that seems divorced from reality -

" What color is the sky in your world ?"

The State of Massachusetts Pension Fund Agency must have a sky that is green, the same as the bonuses they will be helping themselves to this year. The fund lost a total of $5 Billion dollars over the last three year but the managers and staff will reap thousands of dollars in bonuses. In any other professional job, if you were managing other people's money and lost $5 Billion, you'd be out of a job. Not here in Hack-o-ramaville. The fools on Beacon Hill will hand them the extra cash when they are already among some of the highest paid employees in the state.

These managers were criticized by David J. Holway, president of the National Association of Government Employees, the union that represents 22,000 state, local, and county workers in Massachusetts. When a Union Leader is calling you greedy, you know you have gone pretty deep into the muck.

Rome burns and our POLS fiddle....Is it any wonder why people have lost faith in those who are supposed to be public servants as they have lined their pockets at the expense of all others and have no shame at all about what they are doing?

At a time when few public employees are getting raises, the agency that manages the state’s pension fund has earmarked more than a quarter of a million dollars for staff bonuses, including a possible $33,000 payment to the executive director, according to internal documents.

The bonuses, awarded through a performance-based compensation system adopted four years ago, are tied to a three-year period ending in June. During that time, the fund, which started at $50.6 billion, suffered deep losses before rebounding to $45.6 billion.

The compensation is based on investment benchmarks set by the Pension Reserves Investment Management (PRIM) board and not entirely on the fluctuating value of the fund.

The total amount of the bonuses is $267,328, most of which has already been paid. That represents 11.1 percent of the total staff salaries, according to documents obtained by the Globe, and comes just months after the agency handed out $152,000 in raises to its 25-member staff.

The agency’s top two executives will receive their extra pay over two years, a total of 14 percent if the fund meets benchmarks for one more fiscal year.

Executive director Michael G.Trotsky, who is paid $245,000 a year, will receive $33,238.

Similarly, the agency’s chief investment officer, Stanley P. Mavromates Jr., who has the same salary, will collect $34,780. Trotsky has only worked at the agency since August 2010, or less than a third of the period covered by the three years that bonuses are based on.

State Treasurer Steven Grossman, who chairs the PRIM board, said the agency is reviewing whether to continue the controversial incentive compensation system, which also awarded bonuses in 2008. He said he will await judgment until the board’s compensation committee, which was created just after he took office in January, completes its review. The staff has not had raises since 2006.

But he said the central argument in support of the pay system is that PRIM must consider the competition it faces from the private financial world to attract and keep top talent.

“Recruiting and retention of top flight managers is a major issue,’’ Grossman said. “This is not Wall Street. Anyone who wants to make Wall Street money should go to Wall Street - or State Street. We have to consider the importance of recruiting and retaining the most talented people we can find.’’

But some of those who received extra pay have little to do with investment policy.

For example, Trotsky’s secretary, Samantha Wong, got a $4,828 bonus. She has only worked at the agency for little more than a year. She also received a 3.3 percent raise. Another administrative assistant, Alyssa Smith, saw her $44,000 salary increase to $54,000, a 22 percent hike, along with a $4,884 bonus.

Trotsky said both women’s responsibilities had been expanded.

The bonuses come at a time when the public debate, both here and across the country, has focused on widening income gaps, large corporate payouts, and the economic struggles facing the middle class. Massachusetts has seen thousands of teachers, public safety officers, and others laid off or their benefits slashed because state and local governments are making sharp budget cuts.

“These people must be living in some sort of bubble,’’ said David J. Holway, president of the National Association of Government Employees, the union that represents 22,000 state, local, and county workers in Massachusetts.

“For these highly paid individuals to have a payment scheme that gives them huge bonuses for their performance is totally outrageous. Obviously, they haven’t gone by Occupy Boston to see how people are feeling about how the rich are getting richer and the working families are struggling.’’

He said his union is demanding that Grossman rescind the policy.

Trotsky defended the bonus system, saying the pension fund had its second best year ever in the fiscal year that ended in June, in terms of its asset growth. He also said that the fund, when compared to other large public funds nationally, is in the top third in terms of performance, but is in the bottom quarter in terms of pay.

He said paying this amount of money in bonuses to generate high returns is money well spent.

Under the bonus system, pension fund employees can collect bonuses amounting to 30 to 40 percent of their salaries if they meet or exceed benchmarks over a three-year period. The last time the fund gave out bonuses was in September 2008, based on the three-year period ending the previous June 30. At that time, the fund was valued at $50.6 billion. It dropped to $37.6 billion the following year and then rebounded slightly to $41.2 billion by June 2010.

Under the incentive compensation plan, the bonuses kick in when the fund’s performance exceeds the returns of the investment indexes that reflect the mix of the pension fund’s assets. If the decline in the fund’s value is less than the indexes, the agency’s staff can earn bonuses according to a specific performance scale. But if the indexes are not met, the employees do not get the extra money, even if the fund’s assets increase.

The plan was devised by PRIM’s former executive director Michael Travaglini, who argued that the system promoted value rather than conservative investment strategies. He quit his post in 2010 to join a Chicago investment firm when the Legislature appeared ready to sharply curb the performance bonuses. He had earned a $68,000 bonus in 2008. He said he wanted to go to the private sector and make more money to provide for his family

His departure came in the midst of a political advertising campaign by the Republican Governors Association aimed at Timothy P. Cahill, then state treasurer and an independent candidate for governor.

The ads attacked Cahill for his role as chairman of the PRIM board when it approved large bonuses despite steep losses in 2008.

About US Navy Jeep

US NAVY JEEP is a blog dedicated to presenting and promoting information that represents the USA & our fine Military, especially the US Navy & USMC. This also includes being candid and expressing opinions about issues and concerns that effect all of us in the areas of politics, defense and the domestic affairs of our country. This blog has no affiliation with the US Navy or United States Government.

Along the way, I will also enclose info about Classic Cars, Warbirds and other topics of interest...I like to keep it interesting.

I decided to feature the venerable US Navy Jeep because while the ground-pounders in the Army like to think it is exclusively theirs, the Jeep did a helluva lot of duty in the Navy and ferried Seabees/Marines across many miles and beaches fought for an inch at a time. I have also restored my own 1963 Willys Jeep and rededicated her as a Navy Jeep with correct paint scheme and lettering. She is a great old Jeep and I get lots of compliments on her.

As a retired combat Veteran, I find that my ideals have not changed much since retiring and I find the words below to be some of the best ones to express how I feel about a life-long dedication to the US Navy's values of Honor, Courage & Committment.

The Sailor's Creed:

I am a United States Sailor.

I will support and defend the Constitution of the United States of America and I will obey the orders of those appointed over me.

I represent the fighting spirit of the Navy and all who have gone before me to defend freedom and democracy around the world.

I proudly serve my country’s Navy combat team with Honor, Courage and Commitment.

I am committed to excellence and the fair treatment of all.

Wise Words & Sage Advice

"We ask no favours of the enemy. We seek from them no compunction. On the contrary, if tonight our people were asked to cast their vote whether a convention should be entered into to stop the bombing of cities, the overwhelming majority would cry, "No, we will mete out to them the measure, and more than the measure, that they have meted out to us."

The people with one voice would say: "You have committed every crime under the sun. Where you have been the least resisted there you have been the most brutal. It was you who began the indiscriminate bombing. We will have no truce or parley with you, or the grisly gang who work your wicked will. You do your worst - and we will do our best."

" You go into Afghanistan, you got guys who slap women around for five years because they didn't wear a veil. You know, guys like that ain't got no manhood left anyway. So it's a hell of a lot of fun to shoot them. Actually it's quite fun to fight them, you know. It's a hell of a hoot. "

" I have selected as a title of my remarks tonight "The President and the Press." Some may suggest that this would be more naturally worded "The President Versus the Press." But those are not my sentiments tonight....

But I do ask every publisher, every editor, and every newsman in the nation to reexamine his own standards, and to recognize the nature of our country's peril. In time of war, the government and the press have customarily joined in an effort, based largely on self-discipline, to prevent unauthorized disclosures to the enemy. In times of "clear and present danger," the courts have held that even the privileged rights of the First Amendment must yield to the public's need for national security.

Today no war has been declared, and however fierce the struggle may be, it may never be declared in the traditional fashion. Our way of life is under attack. Those who make themselves our enemy are advancing around the globe. The survival of our friends is in danger. And yet no war has been declared, no borders have been crossed by marching troops, no missiles have been fired.

If the press is awaiting a declaration of war before it imposes the self-discipline of combat conditions, then I can only say that no war ever posed a greater threat to our security. If you are awaiting a finding of "clear and present danger," then I can only say that the danger has never been more clear and its presence has never been more imminent.

I have no intention of establishing a new Office of War Information to govern the flow of news. I am not suggesting any new forms of censorship or new types of security classifications. I have no easy answer to the dilemma that I have posed, and would not seek to impose it if I had one. But I am asking the members of the newspaper profession and the industry in this country to reexamine their own responsibilities, to consider the degree and the nature of the present danger, and to heed the duty of self-restraint which that danger imposes upon us all.

Every newspaper now asks itself, with respect to every story: "Is it news?" All I suggest is that you add the question: "Is it in the interest of national security?"

President John F. Kennedy
Address to the American Newspaper Publishers
27 April 1961

Col. Jessep: Son, we live in a world that has walls and those walls need to be guarded by men with guns. Who's gonna do it? You? You, Lieutenant Weinberg? I have a greater responsibility than you can possibly fathom. You weep for Santiago and curse the Marines; you have that luxury. You have the luxury of not knowing what I know: that Santiago's death, while tragic, probably saved lives and that my existence, while grotesque and incomprehensible to you, saves lives.

You don't want the truth because deep down in places you don't talk about at parties you want me on that wall, you need me on that wall. We use words like honor, code, loyalty. We use them as the backbone of a life trying to defend something. You use them as a punchline.

I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide and then questions the manner in which I provide it. I would rather you just said "thank you," and went on your way. Otherwise, I suggest that you pick up a weapon and stand a post. Either way, I don't give a damn what you think you are entitled to..." (From A Few Good Men)

About Middleboro Jones

I'm a Human Resources professional with 25+ years of management experience with companies from the defense support services, healthcare, manufacturing, transportation, & human service sectors. I have a Bachelor’s Degree in Business Administration from Eastern Nazarene College.
I'm a retired US Navy Combat Veteran and held the rank of Petty Officer 1st Class in the United States Naval Reserve. My awards include Meritorious Unit Commendations, Navy Unit Commendation Medal, 3 Naval Reserve Meritorious Service Medals, a National Defense Service Medal, 2 Navy & Marine Corps Overseas Service Medals, Iraq Campaign Medal and designation as an Expert Marksman with the 9 mm pistol & M-16 Rifle.
I was a member of the crew on the USS CONSTITUTION in 1997 when she went under sail for the 1st time in 116 years. I have served on active duty with the US Navy in Iraq, Kuwait, Egypt, The UAE, Bahrain, Pearl Harbor Hawaii, Navy Base New Orleans LA, Newport RI, Port Hueneme CA, Cheatem Annex VA and Tampa FL.